Law School Case Brief
Nat'l Dev. Co. v. Triad Holding Corp. - 131 F.R.D. 408 (S.D.N.Y. 1990)
Notice under circumstances that were calculated to give actual notice to a defendant after process had been delivered to a person of suitable age at the premises attributable to the defendant is the underlying purpose of Fed. R. Civ. P. 4. To this end, Rule 4 should be liberally construed in the interest of doing substantial justice. However, it is clear that notice alone is insufficient.
After the parties agreed to form a joint venture entity in 1984, plaintiff joint venturer, National Development Company (NDC), a corporation wholly owned by the Government of the Philippines, Triad Holding Co. (an offshore corporation owned by Defendant Adnan Khashoggi (the co-joint venturer), and Third Asia (the joint venture) entered into a shareholders agreement by which NDC and Triad Holding each subscribed to one-half of Third Asia's stock; upon winding up, each was to receive a pro rata share of the assets. NDC and Triad Holding (Khashoggi) later agreed to arbitrate any disputes. After Third Asia was dissolved, NDC filed suit to compel arbitration of its demand for one-half of the capitalization assets. Default judgments were entered against Triad Holding. Khashoggi filed a motion to vacate the two default judgments entered against him whereby arbitration was compelled on the claim and which confirmed an arbitration award of money damages for one-half of the joint venture's capitalization assets. Claiming that the Court lacked personal jurisdiction over him in the action and consequently that the default judgments were void and should be vacated, Defendant Khashoggi challenged the trial court's jurisdiction based upon defective service under Fed. R. Civ. P. 4, 5. Khashoggi claims that NDC failed to comply with the requirements of Rule 4, Fed. R. Civ. P., governing service of process, and failed to comply with Rule 5 with respect to the Supplemental Complaint, which invoked the service of process requirements of Rule 4 with respect to a Supplemental Complaint.
(a) Was there proper service of summons on the arbitration claim? (b) Was there proper service of summons on the supplemental complaint?
(a) Yes (b) No
The court ruled that (1) service of process on the arbitration claim was effective under Fed. R. Civ. P. 4(d)(1) where it was made on the apartment supervisor of a building that Khashoggi owned through other corporate entities, even though Khashoggi was a world traveler and his apartment was not his usual and normal residence; and (2) service of process of the supplemental complaint upon which the arbitration award was made was ineffective under Rule 4 and Fed. R. Civ. P. 5(a) where it was made by mailings to the apartment and to Khashoggi's attorney in another matter.
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